Interview of “BLESS” UCO General Director Hayk Stepanyan to Mediamax Agency and Banks.am portal

- Economic crisis strongly “hit” the construction business. How did this fact influence the business activity of “BLESS”?

- Starting from 2008, “BLESS” has been taking up active and consistent work on providing guarantees, including to construction companies.

As it is known, the activity of construction works significantly declined both in 2009 and this year, but despite this fact, in the first four months, 2010, we have provided guarantees at the volume of over 1bln AMD. In the majority of cases, guarantees are provided to construction companies, which carry out state orders. People turn to us concerning this type of service today as well: the only task is that according to the established standards, a credit organization cannot issue guarantees, the volume of which exceeds the threefold volume of the credit organization’s capital. Taking into account the fact that today “BLESS” capital makes 450mln AMD, we have almost neared the established standard limit.

If we trace the dynamics of guarantee provision since 2008, we will get the following picture: in 2008, guarantees at the total sum of about 3bln AMD were issued; in 2009, the term of validity of the majority of contracts, concluded in 2008, expired, and very few new deals were concluded, and not that much because of the crisis, but because we were not that active in that direction. This year, as I have already noted, guarantees at the volume of over 1bln AMD have already been issued. 

- The crisis was a push for establishment of a new direction of business: the first collector company appeared in Armenia. How do the matters stand as to “problematic” credits in your organization and has the necessity occurred to turn to the collector company for services?

- Of course, we have faced “problematic credits”, which became a result of the crisis, when an abrupt decline in turnover means took place, incomparable with the so-called credit load of the borrower. There was a moment, when the share of our “problematic credits” reached up to 8%, but the situation in general is controllable. Moreover, following the results of late 2009 and early 2010, one observes certain positive shifts. Anyway, there are no grounds yet to relax and not to take into account these risks in medium-term prospect.

I welcome entry of the collector company to the market, but so far we have not experienced the necessity to turn to the third party.

- You have had long-term plans on attracting additional means from the internal market, in particular, from individuals, by means of issue and placement of securities. Do you consider the opportunity to realize these plans in the nearest prospect?

- I should note two main arguments, according to which we do not yet plan attracting additional means from the internal market. First of all, the crisis, which led to significant decline in demand for crediting, in connection with which our resources secure for the existing demand. Secondly, we do not plan to enter the standard field, established by the operator, at least not today.

- The quality of customer service is one of the undoubted competitive advantages. Are you pleased with this aspect of activity in “BLESS”? By the way, the honesty of your response this or that way will be backed by the statistics of the Office of the Financial System Ombudsman.

- So far, not a single customer of ours has turned to the Office of the Financial System Ombudsman, and this makes us happy, and, at the same time, obliged. Competent and high quality service of customers is a principle importance issue for us, since moreover today it is difficult to surprise a customer by new products or crediting conditions: the potential customer will always focus attention on the quality of service.

- One of the leading training companies singled out “BLESS” UCO among financial establishments, which make investments into the human capital. Can one state that the crisis taught you a lesson in this initiative?

- Let’s not blame crisis in everything. In this case it has nothing to do, at least concerning our organization. We consider training and improvement of qualification of employees a necessary and continuous process. Our financial system is the one to put forward requirements as to competent employees, without whom it is impossible to get established in the market. Besides, investments into human capital are one of the priority components of our corporate social responsibility.

- Don’t you plan to become active in the market of micro-crediting?

- Micro-crediting does not yet enter the strategic directions of our business, at that motivation is quite pragmatic. Today, a number of credit organizations function in Armenia, which are traditionally specialized and which have quite a rich work experience in this sphere. This is why, micro-crediting should not be an aim in itself for us. At the same time, it is not ruled out that in long-term prospect we can include this direction in the list of our services.

- The Association of Credit Organizations of Armenia (ACOA) puts forward the requirement on establishing equal conditions for credit organizations and banks. The opponents of this opinion, accepting certain arguments, related to violation of credit organizations’ rights, nevertheless, bring a counter-argument, according to which real interest rates of UCOs significantly exceed the bank ones. It would be good to clear the matters in this situation.

- One can find one’s own counter-argument to any argument. Today, as to certain services, banks are exempted from VAT payment, and this is not true for credit organizations. And when banks and credit organizations work in an equal tax field, there will be no necessity to compensate for tax load by high interest rates. Let alone the fact that the list of banking services significantly exceeds the number of services, provided by credit organizations, and each additional service is a source of additional income. 

I fully agree to the demands of ACOA: if the same requirements are put forward for us and banks, we should have equal rights as well.

- As a continuation of the topic, I would like to hear your opinion concerning the draft decision on increasing the standard for minimum authorized capital stock of UCO from 150mln to 1bln. Is there a compromise solution for this issue, which will meet the interests of both the regulator and the UCO?

- Irrefutable is the fact that the market of credit organizations of Armenia has already been formed and the volume of the minimum capital of a UCO cannot be the same as it was in the process of this market formation. At the same time, increase of the standard should be gradual. There are organizations today, which will hardly be able to make their capital reach 1bln. I believe that increase of the standard for minimum authorized capital stock to up to 500mln AMD may become a compromise solution.

The market of credit organizations is at a stage of development today, when gradual increase of the standard for the minimum authorized capital stock will benefit the organizations themselves. In particular, increase of the capital will lead to broadening of opportunities of the organizations’ business activity, but, I should repeat, this should be carried out gradually.